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As 2025 – the best year for gold price gains since 1979 – drew to a close, the question on the lips of everyone following the precious metal was whether the price would clear $5,000 per troy ounce during 2026.
In the event, it took just 23 days of 2026 for the gold price to clear the high end of Deutsche Bank’s predicted range for the year. Gold then passed the $5,000 mark for the first time on the following trading day, 26 January – then, just three days later, it reached $5,500. Gold prices even briefly cleared the $5,600 mark on the morning of 29 January.
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So while it would have sounded almost impossibly far-fetched a month ago, it now seems fair to ask whether gold might soon pass the $6,000 mark.
De-dollarisation and Iran tension boost goldTwo factors in particular drove the price of gold upwards during its dramatic surge on the week commencing 26 January: a weakening US dollar, and increased geopolitical tension particularly around a standoff between the US and Iran.
Gold tends to be priced in dollars. If the dollar loses purchasing power, it takes more of them to buy an ounce of gold; the price of gold rises. That’s why gold is often considered a hedge against inflation.
The US dollar index – which tracks the strength of the currency relative to a basket of other major global currencies (including the euro, the Japanese yen and sterling). It has fallen nearly 2% through 2026 to date, as of 29 January.
US president Donald Trump boosted gold prices on 27 January when he appeared to dismiss concerns over the currency’s slide, telling reporters that “the dollar’s doing great”.
Gold is also viewed as a hedge against geopolitical instability, and once again Trump has been at the centre of an upward ratchet on that front. The president has increased threats to attack Iran for the second time in his year-old second term, with the aircraft carrier the USS Abraham Lincoln having entered the Middle East region this week.
“US naval and air forces are building up in the Gulf as the US has ratcheted up threats on Iran,” said Susannah Streeter, chief investment strategist at Wealth Club. “President Trump has warned that the US is ready to act, if Tehran does not reach a nuclear agreement.”
The aircraft carrier USS Abraham Lincoln is reportedly part of the US ‘armada’ that is raising tensions – and the gold price – by converging on Iran.
(Image credit: Stocktrek Images via Getty Images)
Long term gold price driversWhile gold has made explosive moves early in 2026, this is only the most recent chapter of a long-standing bull run.
Over the last 12 months, the price of gold has more than doubled.
The initial catalyst for this rally was an increase in gold purchases from global central banks, particularly in the wake of Russian assets being frozen in response to Russia’s invasion of Ukraine.
“The rally has been striking, fuelled by bullish sell side views, sustained central bank buying, and a sense among investors that they remain under-allocated to the asset,” said Lousie Dudley, portfolio manager for global equities at Federated Hermes.
But Dudley warns that the rise could start to undermine the very appeal of gold that has made it sparkle.
“Some worry that gold is now drifting into the broader risk-on trade,” she said. Its rise in tandem with industrial metals raises “questions about whether gold is still acting as a reliable hedge in a risk-off environment”.
Even so, there is a strong case to be made for holding some gold in your portfolio. If you feel you are under-exposed, read our explainer on how to invest in gold.
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